Thungela Sees More Coal Disruptions With Transnet Force Majeure

Thungela Resources Ltd., South Africa’s largest exporter of coal burned in power stations, expects rail bottlenecks that have slowed shipments from its mines to continue for at least six months.  

State-owned Transnet SOC Ltd. has been crippled by corruption that affected locomotive supply as well as vandalism including cable theft. Coal shipments on the main rail line to the country’s biggest export terminal slumped about 24% last year.

“Transnet believes that these circumstances will continue to detract from its ability to perform for at least the next six months and that accordingly Transnet is under force majeure,” Thungela said in Johannesburg Stock Exchange statement.

Thungela shares slumped as much as 9.3% in Johannesburg.

“Transnet’s view is that the continued impact and duration of these factors actuate a termination right, and expressed a desire to exercise this right to terminate” transportation agreements, Thungela said. “Transnet however reiterated its commitment to continue to perform the rail services.”

Thungela, the Anglo American Plc coal spinoff, said there won’t be a material impact for the year that differs from its outlook published on March 22. Coal companies including Thungela are engaging with Transnet to clarify the contractual position and ensure coal deliveries, it said.